Q2 2020 Sempra Energy and Oncor Electric Delivery Company LLC Earnings Call
[music].
Good day and welcome to the Sempra energy second quarter earnings.
Today's conference is being recorded at this time I would like to turn the conference over to Faisel Khan. Please go ahead.
Good morning, and welcome to Sempra Energy's second quarter 2020 earnings call a live webcast of this teleconference and slide presentation is available on our website under the Investor section.
Several members of our management team or on the line with US today, including Jeff Martin Chairman and Chief Executive Officer, Trevor Mihalik, Executive Vice President and Chief Financial Officer, Justin Bird, Chief Executive Officer of Sempra LNG.
Alan <unk>, Chief Executive Officer Encore.
Kevin Cigar group President.
And Peter Wall, Senior Vice President Controller, Chief Accounting Officer.
Before starting I like to remind everyone that it will be discussing forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995.
Actual results may differ materially from Doug discussed today, the factors that could cause our actual results to differ materially are discussed in the company's most recent 10-K and 10-Q filed with the FCC.
All the earnings per share amounts in our presentation are shown on a diluted basis. It will be discussing certain non-GAAP financial measures. Please refer to the presentation slides that accompany this call for a reconciliation to GAAP measures.
I also like to mentioned that the forward looking statements contained in this presentation speak only as of today August Fiveth 2020, and the company does not assume any obligation to update or revise any of these forward looking statements in the future.
With that please turn to slide four and let me hand, the call over to Jeff.
Thank you filed one thank you all for joining US today two years ago, we laid out a strategic plan to divest noncore assets and reposition our business in the most attractive growth markets right here in North America.
Plan also called for concentrating our investments in a more narrow segment of the energy value chain with the goal of improving our financial results.
Well to report that our strategy is working you recall that our financial results in 2019 significantly exceeded our original guidance and this year. We're pleased that increased our 2020 EPS guidance range.
Completed our capital rotation program generating total gross proceeds of $8.3 billion.
Continued executing our utility centered capital program, while deferring about $500 million of infrastructure capital.
And at the end of last week, we reached substantial completion at Cameron train three with commercial operations and full cash flows from all three trains expected in the coming days.
Given the quality and strength of our earnings and particularly the visibility we now have to our future growth. We believe recent share price performance does it reflect the value of our company nor its growth prospects because of this we've made the decision the buyback $500 million Overstock and received approval from our board for.
Uhhuh authority of $2 billion for share repurchases.
We are committed to being prudent stewards of your capital and we'll continue to look for ways to drive additional value back to our shareholders.
Turning to our financial results for the quarter, we are benefiting from more concentrated investments in our TNT portfolio. Our adjusted earnings results for the first half of 2020 are up over 50% when compared to last year, primarily driven by the results of our utilities and Cameron we're already touched.
Just on our revised EPS guidance range for 2021 I'd like to also highlight that were also affirming our 2021 EPS guidance range as well now please turn to slide five where I'll provide an overview of our recently completed capital rotation program.
The sale of our Chilean businesses in June for approximately $2.2 billion was the final transaction and our strategic capital rotation program and really sets us up well for the future. When we set out on this path into 2017, we had just finished the year with adjusted earnings per share of $5 and 42.
Since then weve recycling approximately $27 billion in from value back into our business with a focus on T., India infrastructure.
Invested close to $16 billion in of growth capital and our utility infrastructure businesses and raised the midpoint of our 2020 adjusted EPS guidance range from $7 in 10 cents to $7 in 50 cents close to a 40% projected increase over our 2000 said.
17 results.
Our companywide commitment to operational excellence has led to the strong execution of this strategy and our employees deserve a ton of credit we are today more strategically focused more profitable and more optimistic about our future growth prospects as all tied to making further progress on our mission to build north of.
Because premier energy infrastructure company, please turn to the next slide.
Our ongoing focus on safety and reliability remains Paramount and as a critical component of our overall mission here at set for our number one priority continues to be the health and wellbeing of all of our employees customers and the communities. We serve we've built a strong safety and performance culture throughout our organization.
Nation that cannot be more proud of the ongoing commitment and dedication of all of our employees to providing essential safe and reliable service to over 35 million consumers.
We also continue to support our communities through charitable giving.
Donating over $13 million to local health and welfare areas since the start of the pandemic.
As we look ahead, we're continuing to plan for the safe reentry back to the workplace.
We continue to be thoughtful and strategic about returning to the office in a phased approach that considers specific workloads patients and personnel requirements, while adhering to the latest safety guidelines.
From an operational perspective, we built a strong and sustainable business that can successfully operate in a variety of challenging environments by decoupled revenues that are TMZ utilities in California investments in the largest TLD provider in Texas with no exposure to generation and regulatory protection from re.
Tail risk.
Telling contracts with a rated customers that are also our equity partners at Cameron LNG and critical operating infrastructure in Mexico with dollar denominated long term contracts with an average tenor in excess of 20 years.
Our strong financial results year to date highlight this sustainable business model.
Please turn to the next slide.
Across our businesses were invested in the portion of the energy value chain that we believe will provide the best risk adjusted returns nearly all of our five year capital plan is expected to be invested in transmission and distribution projects through our narrowed to geographic footprint sustainable business model and focus on T. and.
The investments we believe we've created an infrastructure portfolio with strong cash flows to support a growing dividends and improved visibility to future earnings growth.
Now I'll turn the call over to Trevor to discuss our cap allocation approach as well as our operational and financial results.
Thanks, Jeff.
As already discussed we believe we've built a business model that can whether the current health and economic crisis and emerged stronger and more profitable.
We have been consistent with our capital allocation approach by prioritizing our utility center capital plan.
Optimizing our balance sheet returning value to our shareholders.
Despite our demonstrated capabilities and superior dividend growth our stock has underperformed this year and trades at a relative discount compared to our peers.
In light of this and in an effort to continue returning value to our shareholders.
We are announcing that we have completed a 500 million dollar share repurchase program.
This $500 million has exhausted the previous $2 billion authorization that we had outstanding since 2007 as part of a previous capital recycling program.
Therefore, our board recently authorized an incremental $2 billion of share repurchases, providing the flexibility to buyback shares on an opportunistic basis.
Please turn to slide nine.
We have a strong track record of returning value to our shareholders. Since 2000, we've repurchased approximately 74 million common shares totaling $3 billion and we're consistently grown our common stock dividend with $10 billion returns to shareholders.
Please turn to slide 10, where I'll discuss operational updates.
SDG any continues to be a leader in wildfire mitigation and has invested over $2 billion and this effort since 2007.
CPSC recently approved STG Annie's wildfire mitigation plan and we have successfully procured wildfire insurance in excess of the $1 billion requirement in compliance with AB 10 54.
These insurance premiums are balanced as part of the 2019 GRC decision.
We continue to innovate and advance our leadership position in this area through our fire save 3.0 program, combining technology and over 10 years of data.
At so Cal gas, we received the proposed decision for approval to recover $806 million related to our pipeline safety enhancement plan.
In addition to our continued focus on safely and reliably serving our customers, we're making significant headway on our sustainable clean energy goals.
We remain on track to meet our goal to procure 5% renewable natural gas for our core customers by 2022.
Separately, we continued to advance our regulatory program that will allow so cal gas as customers to buy renewable natural gas for their homes and businesses along with working with legislators to advance our renewable gas portfolio standard.
The company is also collaborating with several partners on a number of hydrogen demonstration and pilot projects.
As the largest gas utility in the US we believe our scale and commitment to innovation allows us to support renewable natural gas hydrogen and other technologies required to meet the state's clean energy goals in a way that promotes resiliency of the system and affordability for our customers.
Shifting to Texas.
Encore continues to execute on its capital plan.
Encore connected over 20000, new premises in the second quarter and over 38500, new premises year to date.
On the transmission side encore is on pace to set a record for interconnection request in 2020 predominantly driven by an increase in solar generation activity.
Through July there were approximately 270 transmission interconnection requests, which compares to 300 or requests for all of 2019.
Despite the impacts of Cobot 19, Encore believes that we'll continue to have steady increases in it and interconnection requests for the remainder of 2020.
Overall, Texas continues to be one of the most resilient markets in the country and Urquhart system expects to hit a new summer peak load later this year.
Please turn to slide 11, where I'll discuss developments at the Sempra, LNG and Central Mexico business units.
Beginning with Cameron LNG phase one as Jeff said, we're pleased that train three has reached substantial completion with commercial operations expected in the coming days.
The facility is expected to provide nearly $12 billion of after debt service cash flows to sempra. During the 20 year tolling agreement with no commodity our volume metric exposure and is supported by its a rated customers and partners.
Moving to Mexico.
Despite the current market challenges, we strongly believe in the long term fundamentals of delivering cleaner and more affordable energy to the people of Mexico.
Tania and her team our prudently managing inovas business, while helping to ensure the continuity of safe and reliable operations.
Inova continues to be disciplined with regards to capital allocation by strategically deferring capital and executing on its share repurchase program.
In fact.
Across our North American infrastructure businesses, we have deferred about a half a billion dollars of capital in 2020 as a result of the current market environment.
Moving to our development projects.
ACA LNG phase, one has offtake and APC contracts in place and as ready to move forward with a final investment decision subject to receiving the Mexican export permit we continue to work closely with local authorities as well as the highest levels of the Mexican government on advancing the permit process.
Separately I'd like to address the recent commercial contract developments at the ACA re gasification facility.
Two customers are alleging that an update of the general terms and conditions for surface of the facility resulted in a force majeure and breach of the existing contracts.
We believe these allegations are meritless and ACA has notified these customers that they are in breach of their obligations.
We're examining all of our options in light of the timing and baseless and as of the claims and plan to vigorously exercise our rights and remedies in all available forums.
We don't believe that the initiation of arbitration by one of the customers will delay the ongoing steps to fivea on the ACA phase one liquefaction project.
[noise] at Cameron LNG Phase II, we've signed and will use with total Mitsui and Mitsubishi and are working on the preliminary front end designed studies were excited about this opportunity and believe that the incremental capacity at the existing Cameron facility should provide very competitive pricing for our customers.
Given the current market environment, we continue to target Friday on Port Arthur in 2021, we're working with our current and potential customers and remain disciplined on how we allocate capital to the project ultimately demand from customers will drive the timing of Port Arthur.
We continue to believe in the long term fundamentals of the LNG market and Cempra is competitive position, we see long term value in our projects and believed that our financial strength and the strategic location of our development projects provide us with competitive advantages over others in the industry.
Please turn to slide 12.
Looking at our financial results. This was another strong quarter earlier. This morning, we reported second quarter 2020, GAAP earnings of $2.239 billion or $7.61 per share.
This compares to second quarter, 2019, GAAP earnings of $354 million or one dollar and 26 cents per share.
On an adjusted basis second quarter 2020 earnings were $485 million or one dollar and 65 cents per share. This compares favorably to our second quarter 2019, adjusted earnings of $309 million or one dollar and 10 cents per share.
Please turn to slide 13.
The variance in the second quarter 2020, adjusted earnings when compared to last year was affected by the following key items.
$126 million of higher earnings at the California utilities from the release of our regulatory liability in 2020 associated with an income tax expense memorandum account that track differences between the actual and forecasted estimates from 2016 to 2018.
$75 million of higher earnings at the California utilities from higher CPSC base operating margin that of operating expenses, primarily driven by the timing of the 2019 GRC decision.
$65 million of higher earnings from Cameron going into service.
And $31 million of higher earnings at Cempra, Texas utilities, primarily driven by the increased consumption due to weather.
Updated rates, reflecting increases in invested capital and the impact of encores acquisition of Infrareit in May of 2019.
This was offset by $49 million of lower earnings from discontinued operations in South America, mainly as a result of the sale of our Peruvian businesses in April.
And $32 million of lower earnings at parent and other due to income tax items as well as losses on foreign currency derivatives related to the sale of our South American businesses.
Please turn to the next slide where I'll turn the call back over to Jeff.
Thanks, Trevor separate continues to lead this sector in sustainability as highlighted by our strong ratings in May we published our 12 consecutive corporate sustainability report, we're extremely proud of the progress we're making on the environmental social and governance front and this year's report provides a great snapshot of our mill.
Most recent initiatives and our latest results. Our sustainability report also highlights how we champion diversity in fact across the cent per family of companies that we control, 62% our persons of color and then our parent company. The majority of all of our employees are women. We are also quite.
Proud of our board of directors were 62% are women are persons of color I'm very proud of our employees who contain the live out our company values at Cempra, We do the right thing champion people and shape the future. Please turn to the next slide.
We're pleased to report a very successful quarter, both operationally and financially benefiting from a more narrow strategic focus we recently roulette raised our full year 2020, adjusted EPS guidance range and are also reaffirming our full year 2021, EPS guidance range, we remain key.
Committed to creating long term shareholder value and I cannot be more pleased with our overall financial performance.
Even in these challenging market conditions and with that this concludes our prepared remarks, and we'll start to take your questions.
Yeah, Mike.
Please signal.
On your telephones.
There are using a speakerphone please make sure your question.
Your singletary Chuck.
Oh please.
Indicate when your line is open.
Once again.
Good question.
We'll take our first question.
Okay.
Hi, good morning, effectuate cost from being hair stepping in for sure.
Congrats on a great quarter.
Thanks Scott.
We had a couple of questions one on kind of the capital allocation decisions that were announced here and the stock buybacks and bit of a departure from prior.
Language on capital allocation.
Just curious on kind of what sort of timeframe there you're looking at for that 2 billion and can you get a bit more sand from the rationale Scott buyback versus delevering versus reinvestment.
Specifically more from like a strategic perspective does the option that you're announcing today indicated from lack of efficient reaffirming the near term.
And just thinking about like M&A allocation and demand any consideration gone the encore stake and or any other opportunities and favorable jurisdictions.
Thanks, Scott consumers with key questions in there so I'll try to taken in order if I Miss form now please circle back I'll be glad to address I think I'll just start with one of the comments, we may not prepared remarks, let's all that.
We really feel like we did a great traction with our strategy. We set of course, just over two years ago to Penn North America's Premier Energy infrastructure company and to do that we elected to access South American sell from non core assets.
Generated about $8.3 billion, a pretax proceeds which we've been over the effects, we recycle back here into our core businesses, particularly in the United States.
But we've been number one focused on from a capital allocation standpoint, as funding of $32 billion five year capital program at the lion's share that is in those in our utilities. So our first obligations to always make sure that we meet other resource requirements at encore STG, and so Cal das, particularly in the areas and safety role.
Liability.
Second we base and definitive commitments around strengthened our balance sheet.
We set forth our credit targets for the ended the year, namely around debt to cap at our FFO targets, which are reflected in the slides we feel good about where we're at that I will say.
That we feel quite strongly that below the utility sector has underperformed the broader market by about 6% this year and our stock is likewise underperform within the sector and we think we have a very strong top tier growth in income story and Thats why weve taken some steps in this market environment to differ.
For some capital, which Trevor referenced in his prepared remarks about $500 million out of this year into 2021, and Thats created room for us to make sure that we're thoughtful to support our stock. So we were very pleased to be able to use up the remaining authorization from 2007 and the commitment and authorization from our board really is.
To replace that and we are not going to talk about specifically, how we like that that authority to work. Thank our past practices as being opportunistic to support our stock at these levels should guide your thoughts in that area.
Secondly, you raise this issue of M&A.
Thanks to the our practice has been that we'd all as of convention talk about forward looking acquisition activities I do think.
There is always benefit to talk about the lens, but which we look at M&A activity.
And capacity that typically starts with liquid assets that fit our strategy.
We look at.
Assets, where we think we can bring deep expertise to try to operate them more effectively and then thirdly, obviously price matters. We're always looking at their fair price and if we can obviously a dislocation in prices helpful. But if you think about.
Approach to energy future Holdings remember this was the asset that was in bankruptcy and we're able to extend our TNT strategy into Texas, which has been a core priority and we did that at a very attractive price and many lift from that one.
To infer rate, which was very similar position great basket of assets like we picked up for something around 16 times earnings, which is a great price for the quality of those GMDSS. So when you think about where we're at today. We've talked about this lies the management team with low interest rates and credit spreads its surprising to see utilities trade at a discount.
The market and if you look at and we've reviewed a lot of sell side research in this area have looked at Wolf BAML Goldman GBS and others and it's clear that there's a lot of value in our sector today.
Thank you.
One other reasons, where we think about M&A. The one area that we feel like that.
Really fits our strategy.
And also where we have deep expertise in those are really attractive price opportunity with with separate stock. So I mean, we're pretty much pounding the table top tier growth in income story here and Thats one of the reasons that we were opportunistic this summer Im pleased to go into the marketplace to purchase 500 $500 million of our own stock. So.
We have a $32 billion capital program underway that is 100% of our focus versus same time, we're going to be aggressive to contain to look for opportunities to be opportunistic going forward.
Perfect Thats.
I will then that clarifies a bit and just a quick follow up hydrogen has been kind of the topic of interest frequently in California, and Socalgas Americans meeting away and the conversation with R&D.
But what's your outlook on kind of implementing the technology and potential capex allocation in the near term I guess five year plan as an upside.
And are you seeing than they've been regulatory support in California for beside project or that auto early.
Yes I. Appreciate you asked this question. This is something thats at the higher area of interest to US also appreciate your recognition of the great. R&D work has been taking place at STG into cloud gas I'll provide a little bit of color consulting and pass it to Kevin Cigar, who is the group president over California, but I think it starts with the fact that over.
For the last three to five years. This has been a priority at our company right. So we own the largest natural gas franchise in the Western Hemisphere, we serve 22 million consumers right here in California debated natural gas needs and we made the decision in the last several years you know lead in that space.
When you take a broad categories, where we're spending time, either R&D basis or projects, there's probably eight to 10 different eight to 10 different projects that were looking at a fall under the categories of transportation refueling.
Primarily focused on heavy duty vehicles.
Blending opportunities in the power generation blending opportunity into compressor stations at so Cal Das and really the opportunity to co locate from these facilities and take advantage of cost efficiencies with our LNG facility, but we're also trying to take a leadership position Constantine in some of the major trade Association cycle.
Hydrogen council and we're collaborating with the countries, we think they're leading this build today, primarily Japan and Germany. So we're quite bullish on the role of.
Hydrogen and renewable natural gas, particularly here in California, and think about energy transmission. That's in front of our sector and warrants in front of world, particularly in the developing world Hi. During this call play an increasingly important role it's still a little bit early but I think you're raising the deployed the time now to create a leadership position is the workers.
Going inside of our utilities currently have been perhaps you could provide some additional color.
Thanks, Jeff as you mentioned it has a little early but California is always led the way in this area of clean energy and this time I expect that will be no Dodd, Frank and we're having just come off of being a CEO of STG any which is a leader in renewable energy rooftop solar electric vehicles, and having led semper renewables of all in on hydrogen.
Not to GAAP company, we're speaking to all of the leading industry players that you would expect us to be speaking to we've got several exciting projects in development today, we're participating on projects that may file nothing from solar power and recaptured Seo two and others that made green hydrogen from solar power and wire.
Naturally see opportunity in power generation industrial processes are fueling medium and heavy duty transportation, we see opportunities within our own system. We believe hydrogen will play a key role for the 20% 21st century energy system and you can expect.
Our infrastructure at the California utilities will be like right smack Dab in the middle of it.
Well as utilities are working on several exciting hydrogen projects that we will be announcing them in the upcoming quarters and so yes.
Here at my voice API, I'm really excited about hydrogen and I think theres, a big opportunity opportunity here on our utilities are going to be up a big part of them and it's great to any of our infrastructure is well positioned us to play a big well.
Perfect. Thank thats very helpful.
Thanks, so much ill jump back in Q.
Thanks capacity.
And your questions asked and answered.
Your next question please.
We will take our next question comes to your question with Wolfe Research.
Hey, thanks, Thanks for the question.
I guess first of all the 500 million a deferred capex, which part of the business did that come from.
Our all I will start lets say entity that were obviously committed to our $32 billion capital program that with this current market backdrop. We deployed first on the near term end of the capital program. This is really 100% coming from our non utility businesses.
Primarily LNG any level, we've moved capital related to eat into next year. Some capital. We've also differs in capital related to our storage businesses in Mexico, but it shouldn't have any meaningful impact on 2020 or 2021.
Okay and is there any the 2 billion incremental authorization, but that's just does not like a timeline or silly.
[music].
Would you it's fair to say.
No there's no longer I think is that as articulated to Constantine our thank our past practices would guide how we would love to use that.
Okay.
And then a couple just issues that have popped up I guess I get questions. On recently has been this first.
San Diego franchise.
Thank you and then I guess.
So our recent filing you guys made on clarifying lobbying.
And how that should be treated can you just doesn't go through those two appears in your take on them.
Sure I'll take your second question first and come back to the franchise agreement that in California for a long period of time.
Our various investor owned utilities would be looking to promote one view on regulation or another I think the goal always has to get to the best our long term energy policies in the state and the calls or sometimes of lack of clarity about that type of activities you acquire use from ratepayer dollars versus shareholder dollars with.
Felt like that ambiguities revenue that we felt like that for the benefit of the industry. It was worth having a lot of clarity to we filed an ally our to make sure. There's a process around this with a lot of transparency and allow all cloud commissioners interceptor weigh in on it. So we feel good about taking that Steph. Thank you will add some clarity there for all the purchase.
Thats an industry the on the San Diego franchise, I would probably offer you a three different comments here, Steve first for the city charter in San Diego always requires a competitive process to renew it morpol during the city, California anchor doing all the things that you expect them to be doing Reits are running the competitive process. It's opened in.
Transparent.
They've all made in their staff with them outside consultants and all of this is being done with a view toward being the best outcome for the residents of the city I think that leads to my second point.
Which is we have close to 300 franchises across the state of California. So we're always evaluating 10 or 12 of these at a time and our approach the tends to be to focus on each of these as an opportunity for us to get better as a company. We have to remind yourself is a strong alignment of interests with those same residents of the city.
Our also our customers.
We're always trying to find new and better ways to serve them.
Yes remember these are customers that date back their relationship with our company back into 18, hundreds. We first started serving customers here in the region in 18 81.
Let me tell them cost about SDK me as well position.
To be the best partner for the third and not take the three things that we've tried to talk about with the team at STG is that the company that leads our nation and clean energy with rooftop solar here locally at a 15% penetration rate as a remarkable number in the credit to support from utilities and historically we've always.
And targeting roughly 45% procurement for renewable generation, which is also an industry leading position.
In the last 14 years, we've been consistently named the number one utility in the west reliability and that goes back to your stadium safety metrics, where we have a really outsized lead compared to other utilities and finally, just two or three weeks ago, we renamed the number one investor owned utility United States at SPG need for their committed.
And then demonstrated expertise and innovation technology. So as you think about some of our accomplishments Steve you've followed the company for a long period of time I'd like the one thing that's kind of comment about our success historically has been abroad partnership with San Diego gas electric has with the local IBW and labor generally this is good.
Century old partnership here in San Diego, This always privilege safety and good imprudent utility practice in procedure I think it's been central to our success and I think as we approach this opportunity with the city I would approach or from the standpoint that you're always good to have a low dose of humility and try to find the best way to procure foot forward.
Our goal is to put the best value proposition from the city and we have a fair amount of confidence we can do that.
Okay. That's very helpful to than getting water question. So help clarify those two things. Thank you Jeff.
Thank you Steve.
Thank you.
Hey, good morning.
You're talking about.
As you and if I can follow up.
Hey, good morning, Jeff.
So up with the first round of questions here.
Just a follow up here on the M&A question.
Speaking of questions that we'll be getting inbound there's been a lot of consummation of the market railed M&A, specifically and I'm hearing from you all on your call.
A very.
Close focus on value in your own shares can you try to put the square those two a little bit more narrowly maybe said differently. When we hear about companies, particularly frameworks around M&A or the premium names if I can.
Put it that way.
Keith can you.
Perhaps frame the buyback in the context M&A is the buyback really a place hold on your mind relative or what's your level of confidence pursuing this buyback and see it through relative to alternative capital opportunities that pop up here.
Adjusted I hate to do this too that you came up he came in broken up on the front end. Your question would you mind repeating the call me. Please.
Sorry about that.
Specifically on M&A, there's a lot of consternation or the market around.
How you all are to what extent you are engaged on on M&A conversations you are very focused on the value of your stock here on the call can you square your level of commitment to the buyback against a broader array of capital allocation opportunities whether that's in the context of more rate base other utilities or as they started the question with.
Around M&A.
More broadly.
Well I'll be pleased to answer that I would say the in the past and currently we have had no formal discussions regarding M&A activities. It is not in our field as new currently I think what you should hear from my prior comments.
We have what we think is a unique opportunity in our industry, let's really unparalleled visibility to our capital deployment through 2024, and impart Julian that goes back to the quality of the rate case, we got it so Cal gasket STG last year.
Our goal is to fund that capital program meet our credit commitments that we've been pretty clear about relative the credit rating agencies and protected our balance sheet. If we have opportunities, where we can move capital or defer capital within our program you should expect us to the opportunistic with their own stock, but in general when you think your stock.
That is trading at such a deep discounts. We think hours is are we should be trying to find every opportunity we can't have to repurchase stock. So I'm not making commitments about how we will use the $2 billion of authority from our board, but I am telling you. The our focus is our number one the organic growth program that we have and right now that makes a lot.
Horses to buy something at a discount for you to allocate capital something you'll be bite at a premium.
Thanks for the.
The emphasis.
If I can turn back to Steve's questions very very quickly.
What does this process around the franchise a raise that look like you talk about a partnership.
How would you frame the process going forward for investors from here.
I think that the of the invitation to bid up into the offices of the Mayor's office I think Theres, a meeting in San Diego Tomorrow, or the high level approach to the ITD be early investments a bit as being presented to the council yet another opportunity for a lot of the open transparent input from the council to that process.
And probably over the next two to four weeks invitations to bid would come out and then we would expect to participate in that process.
With the view that we will be submitting bids sometime probably in the second half of October but look I can tell you that this has been a priority for our company prolonged period of time. These the type of discussions that are going on for years not weeks or months and there's a lot of commitment to make sure that don't take these side.
So thanks for granted and I think we're very very proud of our company at STG me at its commitment to the community and as I said my prior comments is the best way you're successful and obviously, we manage 300 to these up and down the state of California is your purchase enjoy with a little bit of humility and always from the mindset that we had a chance to get better.
And our job is the modern energy companies by new and better ways to serve customers and thats exactly the approach that the STG team will be taking with the city.
For sure.
Thank you Julie.
[laughter].
With JP Morgan.
As you are and good morning.
Hi, good morning Hum.
Just wanted to touch on.
A bit of a bit of the questions. Maybe has picked up earlier here, but given some of the recent moves in the industry here, how do you feel about the current regulator versus non regulated business mix that you have.
Do you see opportunities to can shift towards regulated more or are you kind of are happy with where you're at.
Okay. That's a great strategic question. This is one that we review with our board or a periodic basis, we've even got discussions with our board on the same topic later this year, our look we certainly privilege.
We certainly privilege the the utility side of our business that represents roughly 80% of our earnings back I was intrigued with not mission. This on order earlier calls is if we take about a year and other business. We certainly think there's going to be a lot of reassuring and onshoring add with good fortune of attending the by allowed.
Discussions and dinner with President Trump and present, both as Arbor door, just a couple of weeks ago, and there's a tremendous amount of collaboration taking place across all three nations under you at them today, and a lot of opportunity for new business and factories and particularly in the pharmaceutical industry to relocate here. So I think it.
Intriguing for us to think about how we look at the you know the business, which we also think is undervalued. We had been actively inside the you know the business buying back those shares because there's a share repurchase program that has been underway there as well quite active this year by the way.
As we think about our LNG business so.
There's more work can be done here, but I think what are the things is intriguing, it's probably less about whether the percentage was 80% of the mix or 90% of that Jeremy what they'd be more interesting is how you make sure that those businesses that are not utility are not considering the balance sheet at the parent company right. So you see obscene other companies now.
Sector do this but the more we can think about.
Having access to the unique growth profile that we have it a unregulated businesses and increasingly overtime make sure it's not impacting our parent company and that does that that is off balance sheet I think thats, a real opportunity for our company.
Got it that that's helpful. There and then.
Maybe just kind of a pivoting over to the LNG business. There it looks like a nice kind of pick up and flows a camera envance steadily moving up there and.
Although the LNG market. It's a you know a bit difficult right. Now just wondering if you could provide any more color as far as our commercial conversations might be happened there if the tone or the pace of change at all granted you talked more about a 2021 that I'd with port Arthur but just wanted to touch base on that and see how.
You know things are progressing.
But I'll be glad to provide some partners who now.
Just if you will make some color I'll pass it to you et cetera, but what I would say interesting if you start Jeremy as a macro level. What's unique is that the norm Northern hemisphere had a very mild winter our storage levels. As we came into the late spring, we're relatively fall and you've seen in impact and natural gas demand global.
Only related to the pandemic I think the most recent IEI forecasts, we're expecting a natural gas demand to decline for the year by about 4%.
What's interesting inside the LNG category, it's actually dollar so global demand for LNG in the first half a year and for the few commodities is actually up close to 2% us LNG exports.
For this six less period compared to last year are up 70% and that's a function allow the new capacity come online in the last 12 to 18 months, including Cameron and Interestingly Europe's consumption of LNG is up 18% in the first six months. So there's clearly an opportunity where LNG is actually.
Price competitive so many countries indigenous supply of natural gas, Thailand will be example, their land in LNG prices cheaper in Thailand, and they can actually produce it in their own economy. So I think that there is continued green shoots and optimism about LNG, but what we've been trying to focus on it I think our LNG team has been.
In a pretty good doesn't on that as we've always had a long held view that that second wave of LNG infrastructure, which is intended to allow for deliveries in the middle part a decade that is a very real opportunity. The LNG is going to play a very very big role in re formulating the energy stack globally.
Roughly 80% of future energy demand will come from the developing world I think this market KMI led by Asia, and specifically, China and the subcategory of India. So there's a big opportunity there and I think this pandemic if anything it's causing some LNG buyers to delay their decision and it's also calling causing other infrastructure providers.
To get behind or fall by the Wayside I think we've got strong balance sheet, we have a very clear eyed vision of what we want to accomplish that LNG and it always comes back to what your competitive advantages are I think our approach of having competitive low cost brownfield sites. They can just dispatched directly.
End of the Pacific and directly into Atlantic is an advantage that no. Other LNG infrastructure provider has in North America, but let me stop there adjacency if you'd like to provide a little bit of color about where we're at with both eco contracts Cameron expansion contract and Port Arthur.
Thank you, Jeff and thank you Jeremy for the question I think.
As Jeff said I think on the supply side, we've seen a period, where there has been a significant I think it's around 8%.
Per year growth rate in LNG supply and.
The consultants and we think as well, but that will dramatically slowed down.
As as the market has changed we think that may end up growing only around 1%. So we think the supply growth will decrease as demand increases.
And that's really an opportunity for world class projects like ours.
To to move forward in terms of our conversations.
Port Arthur as we've said we're targeting 2021.
This is a cut customer demand driven project, we are engaged with picnic, Saudi Aramco and many other customers as Jeff mentioned.
There has been a a slowdown in the market as a result that covered 19 and economic slowdown. It's also the LNG business is adjusting to.
Teleconferences and virtual meeting.
Which is really historically been a face to face business that required a lot of international travel with a slowdown that definitely has.
Slowed down the process, but again, we think overtime that will pick back up and that we think given the competitive advantage. Our projects doesn't look forward in terms of Cameron expansion, we've announced that we have I know you just for the full volume there. We are working with the partners on a conceptual work around the expansion and really trying.
To optimize our expansion from a cost basis and from a timing perspective. So we do continue to see long term growth and the LNG business.
But again, we take a very disciplined capital allocation approach, we will build the projects when they have contracts and when the customer demand is there and when our partners want us to move forward.
Great that's really helpful. Thank you.
Thank you.
Your next question comes from.
<unk>.
Hi, good afternoon, congrats on a core and thank you for the time excessive.
Thank you.
Yes, Hello, my questions have been answered, but I just wanted to see if you could oh.
More color on Mexico.
All right and what's happening there still though.
Geography in the going forward so outside of the you're right.
Geography.
And I'm, just curious to hear a little bit more color on what you're seeing on the ground there. Thank you.
So to just make sure I understand your question like little bit more color on Mexico, as a country and some of the macroeconomic developments.
Correct that than that political landscape, there as well and how that affects.
The development so little bit today.
Dave there.
Okay helpful.
Sure look.
I think separate has been an investor in Mexico for 22 years, we have roughly a 10 billion dollar investments in Mexico, and all aspects of energy infrastructure business. It continues to be a country. We think has a great macro story.
This is never Fiftyth economy in the world pre cobot, our internal forecast also keep that this might be as a number set our economy in the world by 2040.
Number 130 million consumers and it's one of the fastest growing consumer markets in the Western Hemisphere, you raised some good points. There certainly has been you know some disruption in terms of how the Marina Party has been at news stream or the government and its approach to energy generally like I'd tell you I had a good portion that going to do.
Center with President locals Labrador in President Trump two weeks ago, there is true works and authenticity that relationship obviously.
The conversation two years ago or three years ago is more around the border and today. There is broad recognition of the joint opportunity between both countries is they've set a priority of being able to bring back business in factories.
From Asia, So I think theres, a real near term opportunity for collaboration.
And we think there's an opportunity for energy companies like ours that are not really a canadian or U.S. or Spanish or Italian company. This is a Mexican business that we own 67% other Mexico. It's one of the top 10 or 12 companies on the balsa they have scale they've got great relationships with.
Got the expertise and our goal is to make sure. We put forward a great value proposition every time, we have the opportunity to work with the government as you know our business down there is increasing one of a bilateral business with CNR customers and increasingly less reliance on the state on agency. So I think near term there is a lot.
Lack of clarity around some of the policy that can impact the marketplace. We think the long term macro stories intact.
Perfect. Thank you.
Thank you.
Your next question.
Yes.
Hey, good morning, Thanks for taking my questions.
Worries there.
One or two go back to a Korean hydrogen and Sempra certainly has been a thought leader there.
What we're certainly excited about the growth wondering hydrogen and I'm wondering just at a high level of your thoughts on when green hydrogen will be economically viable for the utility sector. We can see applications and places like transportation, but you know the cost or green hydro and continue to look even as pets are dropping look relatively high compared to conventional gas for.
Well I was just curious at high levels for the rough timeframe over which you think green hydrogen may be viable for the utility business.
Well, it's it's a good question I'll start I tell you I don't have a perfect view across right answer is I think the analogy we've talked about on our senior team with photovoltaic cells. Photovoltaics, you know it's been pursued by interest industry going back to the 1960 and it was that separately that we launched the first large scale central states.
And project in 2008, Stephen you May recall that was the copper Mountain project.
It was 10 megawatt so that was 2008 and today, it's not uncommon to see a 500 megawatt project, that's really really price competitive and very much more price competitive in traditional fall for power generation. So.
If we think about hydrogen we see a similar opportunity. It clearly is early on the green hydrogen side, you know asbestos the second half of this coming decade lot will determine on the call on the call her a and how much advances are made on the R&D side I think given that uncertainty it's important.
Not just step up a lot of other companies spend time and resources here, because I think we have a chance.
Impact that cost curve and the impact the commercial viability every hydrogen and particularly when you take about California, where we have periods of the year, where law will renewable resources and they cannot be used and you're actually try to export them or pay contiguous states like Arizona take that our we have a real inefficient.
Certain times of the year and that production profile overlays very nicely with green hydrogen to look I think if there's going to be a breakthrough and there's going to be a development that moves forward in time, California is the place where it will happen.
That makes a lot of sense.
And then just thinking about natural gas usage in the state and obviously, California is doing some thinking around moving away from conventional natural gas.
Give a sense of sort of the regulatory or or other timelines are sort of milestones or other sort of a proceedings that we should be at least thinking about us as we look at that or is it really nothing definitive is just sort of a longer term aspiration within the state.
Yeah. This is a a there's a two part process led by the PC today.
There's a phase one review of the appropriate policies that impacts on natural gas that will lead to a phase two program does that seem to me as hotel das are active in those proceeding, but I think when you speak with a lot of can focus in this space and a lot of political leadership, but there's a recognition of natural gas will play a long.
Turmoil in the United States Energy policy in a long term role in California is energy policy.
Remember they do coupled state Steven you know, it's probably more than a reasonable that natural gas could decline in some areas maybe in our core customers, but with electrification is more likely than laugh that you're going to need. Another one produced two or three or four times electricity. We currently produce and Thats go acquire more natural gas for.
Our power production. So I think what you should expect to see is because we're decouple.
Our interests are aligned with policymakers to make sure. We're we're pursuing LOE costs low carbon strategies, but electrification is a big deal both in the United States and in California, and natural gas, particularly in power production will more than likely increase rather than decrease I think it's important to your point to make sure we get the.
Long term policy right and that's why both of these proceedings at the PC are very important and will be involved the heavy we'd like to add some comments that you know only thing I was around RMG renewable natural gas in the gas company set some pretty aggressive goals for itself, 5%, I 2022, and 20% by 2030, and they're really making good progress on those.
So in terms getting projects online to capture the you know nothing is really really bad really bad for the climate and so capturing it is an important part of the state's calls too.
Mitigate GHG emissions and do something about unchanged. So we're excited about RMG and you know what we didn't you spoke about a regular caught regulatory contract it could be helpful and that will be around the rps far in key selfie. It somehow Rps standard stayed around our Angie I'll be very supportive to more project capturing them. So I'll turn it back.
Comedy Jeff. Thanks, those are all your points out probably this concludes the fact that you know just seven months ago. We got maybe one of the best General rate cases, we've ever gotten so Cal gas right. So they're very much privilege and system reliability and safety has got a nine plus percent CAGR of capital deployment inside their rate base.
So it's a pretty aggressive program that had brought on in fact, no across all three of our utilities and you think about our capital program. We have average rate base growth forecast for next five years of 9%.
That's all really helpful color. Thank you very much.
Reset.
Your next question from.
Goldman Sachs.
Hey, guys. Thank you for taking my question Congrats on a good first start first half of the year.
Two questions one.
Jacki talked about the top and talk about the valuation and how you trade relative to peers, but just curious equal structurally, California I wouldn't.
Still had significant presence there obviously, it's a bit of critical.
Our structurally lower multiple business relative to both related companies in other states.
Let me just make sure I understand your question Mike on by the way. Thank you for joining our call I'll take your question is.
When we talk about tempers valuation how much should it be impacted by structural issues in California is that what you're asking.
Yes, he believed that inherent in the market needs, California <unk>.
So with the lower multiple business relative to utilities and other stuff.
Yeah. My initial instinct is no, but let me get a little more calls going back to the end of 2017 with 80% about earnings composition came from California, where we project out a earnings growth through 2022.
Roughly 50% of earnings composition coastal California, and I think what makes me feel good about the California story. Michael is if you look at remedial measures that were taken to make sure that we're not exposed to wildfires financially, particularly to approve the that's really important I think I love that our government.
You know that lifestyle to quality the rate case, we got right and you heard us talk about this before but we got a remarkable rate case for SD Canadian So Cal gas you also have a really high quality cost of capital.
Steve you need average cost of capital when you blend in the for cost of capital. It's about 10.4% and then you've got this kind of went away now for really a five year deployment of your revenue requirement, which we never had before so as long as I've been around the business I've never been into how that clear the runway for what our authorized spending levels. So I go back to.
The cost of capital their rate case, the remedial measures to make sure that we've mitigated risk in the environment and overall one thing I think it people Miss sometimes Mike when we've been kind of jealous about here at our company is you know the key for utilities.
And make sure your end markets that have a lot of economic expansion population growth and great regulation and when you measure those three categories, California still looks like a premium market as those Texas that we're pleased to have had a tier one position here in a tier one position in Texas is that underlie.
Got it was not just capital deployed for safety reliability that gives you this long term opportunity to deploy capital.
Got it. Thank you for that so just curious on the LNG I'm really thinking trucks that Cameron one through three Kumar mine. That's next five years or so or the next three to five years, how much cash I know you talk about how much you're going to get out on a like for the project that just that's three to five years, how much cash.
Actually get or how should we think about the annual run rate attached to them that Cameron one through three.
But what we've said publicly the path now I'll review it with you as we've talked about having just from camera itself, you know a $400 million to $450 million. Your run rate I think in our latest estimate Michael I'm not revise that to be a little bit higher lifts more work to be done on that we think we have much more clarity.
And to the run rate for going forward.
I think that over the next couple of years 2021. It goes up quite significantly it's closer to 650 million and then it has a steady state around the 450 to for 75, so yeah over that over the life of the project is going to be greater than $12 billion of cash after debt service on a run rate basis is coming closer to.
No. The high end of that 400 before 50 and the next year, just because of how some of the amortization schedules work, we didn't have a little higher cash back to the company in 2021.
Got it. Thank you Jeff much appreciate I'll follow up to that came offline.
I appreciate it Michael.
Your next question comes from Ryan.
Right.
Based on the current business allocating recent 2020 guidance revision is there any color you are able to share at the current outlook for 2021 guidance in drivers within the range.
Well you know I think whether things I'd go back to I had was you may recall, who they are all together virtually on our Investor day, we talked about the eighth system, we had to prioritize our activity.
Really around trying to deliver our financial goals and I think.
If you think about 2019.
We set Florida, an EPS guidance range and during the year, we guided to the high end of the range and we were very pleased Ryan we're able to exceed that range on our February call. When we announced our Q4 results. This year Youll recall, we set a guidance range for 2020.
We've been able to God higher in that range on the May call ended on June 30, as you know, we guided and actually adjusted our range actually raising the low end of our range by 50 cents. So as we think about 2021 I think we are pleased today Ryan to affirm our guidance for 2021, we have some more work to be done.
But we have an evergreen planning process.
It was on constantly and I think that what I would characterize for 2021 as Warner front foot right. You don't have positive uplift from Cameron moves into full run rate you're gonna have you know that the.
Earnings from South America will get knocked out for 2021, we feel good about it we just have more work to be done enough or if we get to that work. It seems like we should adjust the 2021 number we will I think our pattern and practice Ryan has been to under promise and it worked really really hard to exceed expectations.
Thank you and then what we see average price at the 500 million Bauer buyback, but purchase that it was just repeat with the rating agencies named going forward, what credit parameters or guide posts. So you're looking at my setting.
And the share buyback amount so potential timing in future years.
Yeah, I'll start with the our credit metrics now pass it to travel to talk about the the weighted average share repurchase price, but we've been pretty consistent our credit metrics a slide presentation. Today, we remain on track to meet those by the end of the year and those have been commitments. We made of over multi years. So we don't see any change to the credit metrics, but perhaps Trevor you could.
Speak to the but the purchase repurchase program sure Jeff So Ryan what we did as we had a a an MSR on the accelerated stock repurchase program for the last 30 days and the weighted average price of that was 122.
Great. Thank you.
Oh, and just I guess, one mix in terms the rating preview rating agency preview does that answer.
Or not.
The variety repeat the question again please.
With his previous with the rating agencies.
Yes, we have talked to the rating agencies about this you know recently, yet as to what our overall pioneers and wherever we're anticipating to get to by the end of year in the best way I would comment on that line. If you want to cut a short form approaches that we've laid out a capital program in that capital program, we were able to move.
Some capital how this year into future years that was a $500 million shifts in our capital deployment and what we really did was redeploy that capital right into buying our shares at what we think is a very attractive price.
Appreciate it thank you.
Your next question comes from.
Mr.
But more like half of all of our goal Pavel.
I just just a quick question if I go to the potential for that to bring our share repurchase authorization type into that as a place holder for LNG I just spoke about the strength of your LNG model.
Pushed out for that making critical copel impact or something.
You talked about the $2 billion share repurchase over quite holder for that.
The answer yes, it's actually very interesting question that would probably frame it by saying that the last authorization that we're working together with our board was put in place in 2007 and really gave management.
The opportunity to look for quite some time, where we thought the stock is undervalued I think we're certainly what is poised to time today I mean, we're very very bullish on how attractively. Our stock is price today I don't know that our associated directly with LNG, but I think the way we described our capital allocation process. This year, where we fund our first order.
Priorities, particularly about our utilities, we make a commitment to pay down parent debt and deliver our credit metrics to the rating agencies and theres opportunities either from you know a stellar divestiture of an asset or cash flow from other parts for our business or deferrals of Capex, we will always be looking for opportunities.
Periodically to be opportunistic to support our stock.
Great. Thanks, so much thanks for taking my question.
I appreciate it thank you.
Well take our next.
Right.
All right.
Hey, guys in the Vietnam for Eric Thanks for taking my question.
Oh, you get quite probably our power Mark but on Mexico. You know you guys highlighted some of the sort of near term noise that that might be impacting the public share price at this point I'm just gonna be good to get some commentary I know a lot of people on this call said on the board.
You know about how how sempra sort of problem, but represent interests and what kind of strategic levers are available.
The de risk the mistake, whether that be you know the interplay between payout ratio and credit metrics and.
Got it and just generally sort of what the the strategic direction for you know it looks like.
Sure I would say the we have a 11 members on the board in Onea, Nova six come from Sempra, plus Carlos briefs and Tania and we're very active in terms of how they build their capital program, how they manage their balance sheet.
Certainly when you take about that business.
It's very rare in Mexico to see a business a bit scale with U.S. dollar denominated.
Revenues and he thinks about the tenor of that portfolio, they've really been able to assemble a very very attractive basket of assets and remember our long term goal is you don't want to invest outside of our utility unless we take that we can risk adjust those cash flows to match the expectations from a risk reward standpoint about.
Space utility. So one development has taken place down there what kind of goes to the issue you're speaking that is over time, we now have the majority of our revenues coming from non government entities I think we see that trend continuing overtime and I think there will be periods in our investments in Mexico, where we slow our capital spending.
We preserve asset value and we leverage the value of our dividends for purposes of our shareholders, but the long term stories intact, and maybe Feisal I know you're on the board of directors, maybe you can provide some thoughts in terms of how they manage the balance sheet and expectations in terms of creating value in Mexico, I think that in the current environment might be very discipline.
In terms of how we allocate capital in Mexico and that sat through you know you're deferring capital continuing to look at the dividend I continue to buy back stock in Mexico. There was a three the biggest levers that we have in order to create value in Mexico and to the board is very focused on disciplined in the current environment. Clearly you know ACA is a great opportunity for us to.
Great my shareholder value and that for the focus is gonna be going forward. It's I think it's it's pretty straight forward from the way we look it at the board level, there's the opportunity and LNG and then there is the ability to be discipline and how we allocate capital for the rest of the business and to shareholders.
Okay. That's helpful and I'm just on the scenario permitting process can you just give an update on where that stands and sort of what the remaining bureaucratic hang up quite a bit.
This is Jeff I'll, just make a couple of comments number one is a novel request rights. So traditionally you know state owned enterprises I had the domain and responsibility for the export of hydrocarbons. This would be the first permits that they'd issue that authorizes the export of hydrocarbons by private entity number.
The one number to the government has largely been shut down because the pandemic I think Mexico today ranks number three in a world in terms of impact from the virus and death, but I've been going through a really difficult situation economically that's impacted obviously.
The function of the government, but I would I would say this and I've mentioned it several times I think that all the things that you expect us to be doing as a company both at Cempra and that Ienova in terms of relationships and value proposition and followed up with folks we're doing that now I wish we could deliver the scenario permit you to for the last year.
The thing that's gone on a little bit further than you'd probably think reasonable, but look theres been a lot of extenuating circumstances, the conversations remain quite positive and I'm optimistic it will get the permit or later in Q3.
Great. Thanks, guys.
Appreciate it.
Your next question.
Right.
[music].
Hey, good morning, How're you doing.
Hey, Paul.
Almost all my questions are going to answer just really.
Just back to the.
Franchise agreement San Diego, what cool unusual.
I guess is this idea of having.
A competition so to speak and I'm just what's what's unclear to me because you guys are all these facilities, there and everything what would happen it from.
In fact, the franchise was actually awarded to another party what would be the POS is from there if you fall what I'm, saying.
As you mentioned you're negotiating around the around the state.
Hi, Bob this receivable rounded other places, but never seen a situation, where there's natural competitive bid so to speak for the franchise what would it and if we actually were to somebody else.
I would probably say fall to the most probable answers a simple to answer which is.
In this case the franchise.
The city charter requires the competition right. It requires that go out and compete that so I don't know how this is done in other jurisdictions, but in San Diego. This is a requirement in the city charge. This is not like an anomaly that they're doing something outside of what they are required to do and our approach really is that is to make sure that we as I indicated earlier we approach.
This with the dose of humility, we put forward a really really attractive partnership campaign. I think you can look at other jurisdictions I think you know Boulder, Colorado as an example, leday things turn into very extended long term contest, we don't think thats desirable for anyone on I think you know what we want to do is used this policy.
Too early for our company to get better and reassessed, our stress and make sure. We put forward commitments that we can stand behind we can take a century old relationship and make it better.
Okay, good to sort of understand that though there'll be a completely different process. If there was the franchise award to somebody else that would.
Would it be surprising at that resulted as a lot of litigation and cost et cetera, if I understand that correctly that would affect about it.
I don't know if I would characterize it as litigation I can tell you that you know our focus and attention. It's on controlling what we can control, which is we want to put forward. The best most compelling value propositions the city. He's our neighbors right. This is the place we care about a lot. So we're going to play to win Paul and I think that's the 100 per.
The focus of our attention.
Okay.
Thanks, so much.
I appreciate it. Thank you. Thank you for joining the call.
Okay is there no further questions at this time I would like to turn the conference back to Mr. Jeff.
Hey, Mike.
Thank you all for joining US today. This concludes our call. Most importantly, I hope each of you stay safe and healthy feel free per customer reach Alycia IR team with any additional questions. Thank you again.
Yeah.
That concludes today's call. Thank you for your participation.
Hi.
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